Aave Considers Exiting Six Low-Performing Blockchains

Aave is considering a proposal to cease operations on six blockchains, impacting nearly $98 million in deposits.

Aave, the leading decentralized lending platform, is evaluating a governance proposal that would involve discontinuing operations on six blockchains deemed low-performing. This decision would affect approximately $98 million in deposits across Sonic, Scroll, zkSync, Metis, Soneium, and Aptos, which together represent less than 1% of Aave's total assets of around $14 billion.

The rationale behind this move stems from the economic performance of these chains, which collectively generate under $5,000 in quarterly revenue, insufficient to cover maintenance costs. For instance, while Aave's Ethereum mainnet deployment brings in over $142 million annually, the six targeted chains lag significantly behind, with some like Metis and Soneium earning less than $1,000 each per quarter.

Following a dramatic decline in deposit levels over the past six months, with Soneium experiencing a 95% drop and Aptos falling by 94%, Aave's proposal includes freezing these markets to new transactions and implementing a high borrowing cost to encourage users to exit voluntarily. This initiative reflects Aave's strategic shift towards cost-cutting and risk mitigation, aligning with previous recommendations to withdraw from low-performing deployments.

In the past year, Aave has retained about $117 million from $888 million in interest paid by borrowers, with the latest quarterly reports showing a drop in gross revenue from $198 million in Q1 to $156 million in Q2. As such, the proposal to exit these six blockchains is seen as a necessary step to streamline operations and focus on more profitable ventures.